Doing Business Blog - The World Bank Group

Unleashing Women Entrepreneurs in Emerging Markets

Over the next two years Doing Business will identify laws and regulations that discriminate against women. In the United Arab Emirates and Yemen for example, the law forbids women to work at night. To start a business in the Democratic Republic of Congo, married women need their husband’s consent. And in many African countries, women have fewer inheritance rights than men.

Such laws must change because they prevent women from realizing their economic potential and constrain economic development. And where there is enormous growth, the demand for talent is huge. Last time in Delhi, I met up with an old friend from law school. She works as in-house counsel for a successful Indian private equity fund. When asked if she was happy in her career, she told me she had decided to quit the law to start her own business.

I haven't figured out the type of business, but I’ve consulted with a fortune teller and the timing is right. India is the place to be- there are so many opportunities. It is now or never.

Engaging in Reform, and a Note from Yemen

Relations are said to go through three stages: lust, rust and dust. Engaging in reform is more complicated, requiring double that. At least this is the experience of the Doing Business team.

First comes denial. When the results of Doing Business are published (see the latest installment out as of September 2007), the media picks them up, lauding successful reformers and embarrassing laggards. Angry denials are heard: “The data are wrong. This is not us. The respondents are all opposition members. We will teach those bird-brains at the World Bank a painful lesson.”

Doing Business Gets a Second Life

On Oct. 26, Doing Business turned its attention to the virtual world by launching Doing Business 2008 in Second Life. During the three-hour event, I presented the report and took questions from Second Life residents on Activ8 Island. In total, almost 700 residents and their online personas, known as avatars, attended. Another 1,000 tuned in by audio. It was the largest audience we have ever reached in a single event. It was also the first time for the World Bank to appear in Second Life.

Second Life is an online, virtual world created by its users, also known as residents. It offers a platform for communication, business, and education. Besides residents from North America and Europe, more than 1 in 5 residents logs on to the virtual site from Latin America, Asia or Africa. This may seem like old news to some of you. To me, it was really a news flash.

Getting the Power of the Entrepreneurial Spirit

Is entrepreneurial spirit innate or can you cultivate it? This question is central to economic development since entrepreneurs create most new jobs, invest in the newest technologies, and build successful businesses. Schumpeter, the biggest advocate of its importance, coined the (German) term Unternehmergeist, meaning entrepreneurial spirit. Not surprisingly, the term didn't stick, but the idea did.

Still, Schumpeter did not say what a government can do to encourage entrepreneurs. Neither did any of the notable economists after him. A recent study by Harvard academics and Doing Business researchers may have an answer: "Our data reveal a consistent and large adverse effect of corporate taxation on both investment and entrepreneurship. A 10 percentage point increase in the effective corporate tax rate reduces the investment to GDP ratio by about 2 percentage points (mean is 21%), and the entry rate of new businesses by 1.3 percentage points (mean is 8%)." The study also shows that simpler procedures for starting a business and more flexible labor regulations are associated with more entrepreneurship.

Another study, by Berkeley academics and Doing Business researchers, finds that entrepreneurs share one main characteristic: their family has many entrepreneurs and, with high probability, their childhood friends are also entrepreneurs. In other words, it is the social and family environment that nurtutes the entrepreneurial spirit.

What do you think? How does one get the Unternehmergeist?